Hello, I am trying to educate myself in this realm but I am a bit overwhelmed as this isn’t my forte. I would really appreciate some advice. My 48 month lease ends on Jan 2025. Dealer keeps calling me to get into a new lease, I assume because I may have equity; however, I’m trying to figure out if it would be wiser to purchase the vehicle. Here are the details/numbers: 2021 Lexus NX 300 Utility 14,700 miles.
Gross Capitalized Cost $47,954.73
Residual Cost $20,270.40
Rent Charge $2076.00
Base Monthly payment $485.98
Monthly Sales/Use Tax $34.02
Purchase Option at End of Lease Term $20,270.40
Thank you for your response! I would have to finance the total amount due to purchase as I do not have that amount in cash. I read that I will obviously pay a higher interest rate since it is considered a used car, is this still the wiser route to take rather than using the equity toward a new car purchase and financing that instead? Thanks again for your time.
Yeah a used 2021 NX 300 FWD with 15k miles in FL lists for $30k. auction/wholesale is likely $24k (you may be able to have someone in the MMR thread help you confirm this if you’re a supporter. You’ll come out ahead if you buy the car.
It’s up to you to decide what to do with the positive equity. But of course Lexus wants all this upside equity if you simply return the car and walk into a new lease without rolling the equity.
If you just need 60 days of cash to resolve rolling the equity, you can withdraw cash from your 401k or IRA… then use that cash to buy the car at the end of the term, then sell the car (to Carvana or some buyer). Then take the amount of your withdrawal and put it back into your 401k/IRA.
You’re allowed one of these wonky rollovers per year. As long as the cash ends up back in a qualified account there is no withdrawal penalty.
You have a residual buyout of 20,270.40. How on earth does LFS arrive at a buyout price of 25,787.02??? YIKES! Even if the sales tax rate is, say, 11%, that would give a buyout of about 22,500 plus, perhaps, some admin fees. At most, it shouldn’t be anywhere near 23,000 as it’s not likely that your sales tax rate is 11% or more. I assume you’ve made all payments on time. If you provide me with some details (sales tax rate, the portion of your lease contract detailing purchase option/fees at lease end), I can get very close to your total buyout price.
I’d have to run the numbers: finance v. lease. It depends upon your existing implicit lease interest rate (lease amortization rate- would need to know your adjusted cap), your cost of money (finance interest rate), your opportunity cost of investment… a lot of factors enter the decision. You would basically be doing a lease versus buy analysis (incremental cost analysis) that considers the time-value of money. I can help you with that if you get me the data…
Lease Data: sales tax rate, adjusted cap cost in your lease agreement, all buyout information including fees, lease expiration date, LFS method of computing the adjusted lease balance - need to confirm LFS buyout amount via my calculations.
